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Masco Corporation (MAS - Analyst Report) announced at an investors’ conference recently that its sales in the month of November were up in high single-digits; signaling that the fourth-quarter top line could be strong like the past two quarters.

Masco’s third-quarter (results announced in late October) sales increased 12.4% year over year and also beat the Zacks Consensus Estimate driven by volume growth. Volumes benefited from products/programs launches; increased new home construction activity and improvement in repair/remodel activity in North America; and increased outside U.S. sales. Most encouragingly, the company saw some traction in big ticket remodeling which has been sluggish for the past few years during the housing downturn. In addition, management stated that the fourth quarter was off to a strong start with October sales up in high single-digits. With the November sales also up equally, Masco could post another strong quarterly performance next month.

Masco’s third-quarter earnings of 27 cents per share also surpassed the Zacks Consensus Estimate and grew 92.9% year over year driven by solid revenues, cost control and better operating leverage. Margins were also strong and both Installation and Cabinetry segments once again showed strong profitability in the quarter after underperforming in 2012.

At the investor conference, management also highlighted the several strategic initiatives undertaken to drive growth and shareholders’ value. The initiatives included the improvement of underperforming businesses like Installation and Cabinet; solidifying its market position and leveraging its brands, product introductions and product innovation, reducing costs, paying off debt and strengthening the balance sheet.

Masco carries a Zacks Rank #3 (Hold). We are encouraged by the company’s continued focus on product innovation and cost improvements. The company is also divesting its less profitable and underperforming assets to focus more on its core areas. However, though improving trends have been noticed, we await more substantial improvement in Europe, cabinetry business and consumer spending on big ticket remodeling.

Other Stocks to Consider

Better-ranked stocks in the building/construction industry include CaesarStone Sdot-Yam Ltd. (CSTE - Snapshot Report), Trex Co. Inc. (TREX - Snapshot Report) and James Hardie Industries plc . While CaesarStone and James Hardie carry a Zacks Rank #1 (Strong Buy), Trex carries a Zacks Rank #2 (Buy).

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